Most Americans have some form of debt, but it becomes a problem when the amount they owe surpasses their income. The debt-to-income ratio compares monthly debt to monthly earnings, and recent data shows that the average debt has increased to $22,713 this year. Two-thirds of people have some debt, mainly from credit cards, auto loans, and education loans.
Recent data from the Federal Reserve and Google search trends analyzed by The Kaplan Group highlight the distribution of rising debt burdens across states based on the debt-to-income ratio. Searches for “debt relief” have increased by 49% in the past year, indicating a growing concern for debt among Americans.
The five states with the highest debt-to-income ratios are Hawaii, Idaho, Arizona, Colorado, and Nevada. Hawaii and Idaho both have a ratio of 2.06, meaning households owe twice as much as they earn monthly. Arizona, Colorado, and Nevada have a ratio of 1.84, nearing double the gross monthly income.
On the other hand, New York has the lowest debt burden among U.S. states, with a ratio of just 0.4. Despite this, it has the highest search interest for “debt relief” with an average of 12 searches per month per 100,000 residents.
Illinois, Ohio, North Dakota, and Iowa are the states with the lowest debt burdens, all having a debt-to-income ratio of 1.11. This indicates a more manageable debt level compared to the states with higher ratios.
Understanding the debt burden in different states can provide insights into financial challenges faced by residents and the need for effective debt management strategies. By analyzing debt-to-income ratios and search trends, individuals can make informed decisions to improve their financial health and reduce debt stress.